LILONGWE— Public criticism is mounting in Malawi and some international donors are withholding development aid after the alleged theft of more than $250 million in public funds and an investigation that has dragged out for months.

Some local observers believe the future of the administration of Malawi’s President, Joyce Banda, may hang in the balance when national elections are held in four months.

The Malawi police uncovered what is now called the Cashgate scandal in September, several days after the attempted assassination of the country’s budget director, Paul Mphwiyo. Mphwiyo survived the shooting and is believed to have been targeted because of his tough stand against looting of public funds from government.

Much of the looted money was found stashed in the cars boots and houses of some of more than 60 suspects. Police say an estimated $350,000 was found in the boot of a car belonging to a civil servant in the Office of President and Cabinet.

Frozen accounts, party suspensions, property seized

The investigation into the scam has led to the arrests of two executive members of the ruling party, Ralph Kasambala and Oswald Lutepo. Both have been suspended from the party.

Lutepo was deputy director for recruitment and is accused of money laundering.

Kasambala was director of legal services and is also accused of master-minding the attempted shooting of Mphwiyo. Both have been released from jail on bail.

As part of Anti-Corruption Bureau (ACB) investigation, the government has frozen 33 bank accounts belonging to some of the suspects and seized many properties suspected to have been acquired dubiously.

Lameck Masina's Lilongwe interviews on Cashgate probe

The government hired the UK-based forensic experts to audit government accounts.

Investigators say the looting occurred because of a loophole in the government payment system known as Integrated Financial Information Management System. Government authorities say flaws in the payment system have been rectified.

Banda counts on voters in the villages

People’s Party deputy spokesperson Ken Msonda said there is no way the scandal would impact on the party’s chances of winning the elections. He says the party’s popularity in rural areas is overwhelming.

“My brother, come what may, the writing is on the wall. People’s Party and Joyce Banda, we are making it, because the majority of voters are in the villages, not in town.

“Those in town making noise don’t vote. When they come to voting they go to the lake and some of them go outside the country. And villagers are now able to see that things were tough. There was no fuel, no medicine in the hospital and they are now able see that things are going back.

“These are the people who matter in Malawi, not those who dwell in towns.”

Some are skeptical of government probe

“Personally, I don’t expect good results from the investigations process for a simple reason that the investigation process is being supervised by the executive which is part of the suspect,” says Ernest Thindwa, a political science lecturer at the Chancellor College of the University of Malawi.

“And people suspect that the executive is at the centre of the Cashgate scandal and indeed all indications are that the ruling party functionaries have been implicated.”

Thindwa says it would have been better to ask an independent body to supervise the investigation.

“But as it is, even if the investigators are doing a good job, the mere fact is that the executive - which is part of the suspect - is supervising.

“Not many people will have confidence in the results, particularly if the results tend to be that most of the party functionaries that are being suspected, are getting away with it.”

Thindwa says people seem to have lost trust in government and the Cashgate scandal is likely to influence voting because the delivery of public services has been affected.

Business community not impressed with probe

The Malawi Confederation of Chambers of Commerce and Industry (MCCCI), a representative body of the business community, also charges that the government has performed an “unimpressive handling of the Cashgate scandal.”

In a statement published in a local daily The Daily Times, MCCCI officials say they are disheartened that the scandal appears to slowly being swept under the carpet. They question whether government intends to protect some suspects.

Two weeks ago, the civil society organization known as the Grand Coalition launched a Black Monday Movement to mobilize a nationwide protest. They asked Malawians to dress in black every Monday to protest the failure of the investigation to meet its November deadline. There have been no reports that Malawians have protested in black.

People’s Party's Ken Msonda says the party has not interfered in the Cashgate investigation.

“As ruling party, we have not interfered in the ongoing investigations into the Cashgate scandal. Now, those who are saying the outcome is a little bit slow, they want to force us to interfere in the process of justice, which is not right in the democratic set-up.

“We have allowed the ACB [Anti-Corruption Bureau], the police and those involved in the corrupt practice act to work independently without interference from the powers that be.”

International donors pull back on pledges

Several international donors recently announced withholding of their portions of the $120-million quarterly aid funding to the government, pending the outcome of the investigations.

Among those withholding development aid funds are the European Union, the United Kingdom and Norway. All are members of coalition called the Common Approach to Budgetary Support (CABS) whose donations comprise about 40 percent of Malawi’s national budget.

CABS co-chair Sara Sanyahumbi says donors withheld funding because they had lost confidence in the government’s finance management system.

“We have seen serious weaknesses which have enabled people to take money out of government system. While that is the case, you know the donors cannot responsibly continue to put money into government systems. So at the moment, while the investigations are going on we have delayed any funding which was planned to go into government system.”

Malawi continues to receive development aid relief from other donors including the United States. U.S. officials said they won’t withhold their funding to Malawi because the U.S. funds are project-oriented amounts that are not channeled through government coffers which could fall prey to the looters.

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